October 31st 2019

Dr Albert Pineda; Marketing & Sales Manager

BREXIT:CHALLENGES AND OPPORTUNITIES

IN THE PHARMACEUTICAL SECTOR

Kymos Pharma Services

BREXIT: Challenges and Opportunities in the Pharmaceutical Sector

A Different Perspective:

• Kymos’s testimony goes beyond the conventional “CRO trades with

UK client” and overcoming barriers to internationalization.

• Our services are part of a complex international supply chain which,

while less straightforward, makes the effects of Brexit more visible

and quantifiable.

• UK is among the greatest trading regions and cannot be understood

in isolation: From the first Guilds of London to the East India Company

the UK pioneered modern international trade.

• Working in the UK global business one becames aware of certain

non-tariff indicators which capture the mood of the market:

Kymos Pharma Services

BREXIT: Challenges and Opportunities in the Pharmaceutical Sector

25/10/2019 UK BioIndustry Association Quickpoll

Some of them subtle…

Kymos Pharma Services

Referendum: UK public

vote to leave the EU.

David Cameron resigns.

June 23, 2016 August 29, 2017

EU/UK negotiations

close to breaking point.

March 29, 2017

PM triggers Article 50:

UK to leave EU in 2 years.

Theresa May loses and

continues as a minority

government.

June 8, 2018

After delays Brexit deal is

rejected by UK Parliament.

January 15, 2019

May steps down and Boris

Johnson becomes UK PM.

June/July, 2019

Johnson makes no-deal

Brexit “the top priority”

August 10, 2019

October 7, 2016

May’s "hard" Brexit

speech leads to 6%

flash crash.

XE Currency Charts: GBP to EUR

https://www.xe.com/currencycharts/

2016 2017 2018 2019

BREXIT: Challenges and Opportunities in the Pharmaceutical Sector

Some of them more obvious…

Kymos Pharma Services

BREXIT: Challenges and Opportunities in the Pharmaceutical Sector

A short-sighted media focus on Brexit:

• Most of the press is currently focused on the theatrics of the power

struggle between UK and the EU.

Some would claim it is hard not to…

• But the “hard vs soft” Brexit debate trivializes a longer term problem.

• In order to understand the lasting impact of Brexit we must focus on

the transition period and what follows beyond Brexit itself.

Kymos Pharma Services

BREXIT: Challenges and Opportunities in the Pharmaceutical Sector

The new Withdrawal Agreement (WA) - Where are we now?

• Transition period up to end of 2020 (possibly extended to Dec 2022). During the transition:

• UK and EU will negotiate the terms of their future trade agreement (FTA).

• “The parties will also explore the possibility of cooperation of the UK authorities with Union

agencies such as the EMA”. Excerpt from Johnson’s WA (and also May’s).

• Firms could continue UK batch release, testing and QP certification.

• MA holders, QPs, QPPVs could continue to be based in the UK.

• Manufacturing and distribution licenses and inspections would be recognized.

• UK would be treated as a Member State for the purposes of MRAs.

• But also…

• No UK participation in EU institutions and no UK “leading authority”.

• Medicines and Healthcare products Regulatory Agency out of EU regulatory network.

• Readmittance entirely subject to negotiation.

• After the transition:

• If a FTA is not agreed, Northern Ireland would apply EU rules while the rest of the UK

would move to a no-deal/WTO relationship. MHRA to apply two sets of rules.

• No EU database access. UK no longer “pure” third country to EU.

• “UK aiming towards mutual recognition of medicinal products produced in UK and EU”

Matthew Hancock; Secretary of State for Health and Social Care.

Kymos Pharma Services

FULL ALIGNMENT TO EU CUSTOMS

UNION

SECOND REFERENDUM

REQUIRED BEFORE RATIFICATION

A TECHNICAL DELAY:

Oct 31st – Jan 31st

WITHDRAWAL BILL UN-PAUSED

GOVT PUSHED FOR GENERAL ELECTION

BEFORE 2020?

SECOND REFERENDUM?

A LONGER EXTENSION

NEW AMENDMENTS

BREXIT: Challenges and Opportunities in the Pharmaceutical Sector

The new Withdrawal Agreement – What happens next?

NO DEAL?

Kymos Pharma Services

BREXIT: Challenges and Opportunities in the Pharmaceutical Sector

The new Withdrawal Agreement – If No Deal:

• UK ensuring medicine supply until absolutely clear a no-

deal Brexit is off the table.

• MHRA guidance on submissions and QPPVs update.

• Ferry and freight additional services for priority goods.

• National Supply Disruption Response for medicines,

devices, trials & vaccines.

• Simplified customs, imports and tariff procedures.

• Immigration: Salary thresholds and point-based system.

Kymos Pharma Services

BREXIT: Challenges and Opportunities in the Pharmaceutical Sector

The new Withdrawal Agreement – If No Deal:

• In spite of all UK Government measures the situation will remain highly volatile, with

uncertainty pushing clients to make subjective, potentially long-term choices.

• Word on the street is:

Kymos:

A different perspective

Kymos Pharma Services

A different perspective - Company overview

Mass Spectrometry

Immunology

Characterization

Analytical Development

Stability Studies

Batch Testing

Batch Release

Bioanalysis(preclinical & clinical)

CMC(chemistry,

manufacturing &

control)

Small molecules Biologics

Our Value Proposition

Kymos is a company devoted to provide analytical expertise and testing capabilities

to third parties for research, development, regulatory and marketing purposes.

Kymos Pharma Services

A different perspective – Company overview

Locations

Cerdanyola del Vallès, Barcelona, Catalonia, Spain

Camerata Picena, Ancona, Marche, Italy

Barcelona

Headquarters and Laboratories

Staff of 100 people

Ancona

Laboratories

Staff of 15 people

Kymos Pharma Services

Global presence

Europe: business development headquarters in Barcelona and offices in Milan and Paris. Strong presence

in southern and central Europe

Asia: relevant partners in South Korea, India, China and Japan

A different perspective – Company overview

Kymos Pharma Services

A different perspective – Company overview

Kymos Pharma Services

Headquarters

Barcelona, Spain

Laboratories (1,500 sqm)

• Fit to purpose building: technical gas station, emergency electric supply,

purified water plant, and IT data room

• 6 main laboratories: Bioanalysis, Immunology, Microbiology, Physical-

Chemical Analysis, Analytical Development, and Biopharma Testing and

auxiliary facilities for sample storage, inflammables, residues…

• Clean room for microbiology testing.

• Containment room for high potency products (HAPI) up to OEL4.

• Sample reception and sample storage area with room <25ºC, climatic

chambers, freezers, and ultra-freezers.

A different perspective – Company overview

Kymos Pharma Services

Shareholders:

• Founder Managers

• Key Managers

• Family Office from pharma sector

Governance:

• CEO, COO and CFO

• Steering Committee

• Board of Directors of 4 members with quarterly

meetings

• External member in the Board

• General Assembly with a yearly meeting

Compliance:

• Audited company

• Board Attorney and External Legal Advisor

• Code of Conduct

• Environmental & Safety

• Privacy & Confidentiality

• Quality certifications

Future:

• Opened to deals & acquisitions based on

opportunities

Fast growing European

CLO (contract laboratory

organization)

reliable and

experienced

management team &

solid financial structure

A different perspective – Company overview

0

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2011 2012 2013 2014 2015 2016 2017 EST.2018 BGT.2019

KYMOS PHARMAPROGRESS

PharmaprogressKymos

Kymos Pharma Services

A different perspective – Batch Testing & Release

Batch ReleaseBatch Testing

Batch Testing & Release Annual Evolution:

5.3-fold increase of Batch Testing quotes

2.7-fold increase of Batch Release quotes

from 2016 to 2019*

*up to October 2019

Among our many CMC services, Batch Testing & Release have experienced significant boosts:

Kymos Pharma Services

A different perspective – Batch Testing & Release

What is Batch Testing & Release?

• Imported products manufactured outside of the

EEA must be tested by a GMP-compliant lab

before being released into the market.

• Under current legislation, manufacturers must

test batches from non-EU/EEA third countries

if not covered by a MRA.

• This also applies to batch release and

pharmacovigilance activities, which must be

performed by QP & QPPVs within the EU/EEA.

• During the transition period, firms could

continue these activities within Britain, with

UK inspections and MIA licenses still recognized.

• Beyond the transition and depending on the

FTA/MRA deal, the UK will become a “third

country” and all EU law will cease to apply.

Kymos Pharma Services

A different perspective – Batch Testing & Release

What is Batch Testing & Release?

• Kymos is GMP-compliant, FDA inspected, holds a Manufacturing Authorisation (MIA), is

certified as importer, and count with multiple QPs to provide a full service pack.

• Kymos provides services for human, veterinary and investigational medicinal products with

capabilities to release small molecules, biologics, sterile and non-sterile DPs. We offer:

Importation

• Request of importation license to AEMPS

• Importation in the European Union (IMP and DP)

• Warehousing, EU depot and shipment, if necessary

Support activities

• QP Declaration (template 5.22)

• Manufacturing plant audit for EU-GMP compliance

• PQR yearly review

Batch Release

• Certificate of Analysis

• OOS, deviations, CAPAs and change control

management

• Certificate of Release

Kymos Pharma Services

A different perspective – Batch Testing & Release

Batch Testing & Release as an Empirical Indicator:

• First take-home message: 5.3/2.7-fold increases

in Batch T&R demand imply a lack of trust in

UK Govt mitigating measures post-Brexit.

• While the rise in demand cannot be attributed

solely to Brexit, the fact that Kymos has not

actively promoted Batch T&R services indicates

the increase is at least a relevant indicator.

• Most of Kymos’ UK Batch T&R clients

manufacture their DPs outside GB. They seek

to ensure project continuity and minimize risk

by opting for continental CROs and QPs.

• If these assumptions are correct, the trend

should persist during the 2020 transition and

beyond. Firms that went through the hassle of

shifting to a continental CRO may demand

significant guarantees to shift back.

Kymos Pharma Services

A different perspective – Batch Testing & Release

2016 2017 2018 2019

Batch ReleaseBatch Testing

5.3-fold increase of Batch Testing quotes

2.7-fold increase of Batch Release quotes

relative to Pre-Referendum quote request levels.

Batch Testing & Release as an Empirical Indicator:

Brexit:

Closing remarks

Kymos Pharma Services

Brexit: Closing remarks

Closing remarks:

• Batch Testing & Release will continue being allowed within the UK

during the 2020 transition but the market is preparing for the worst.

• Batch T&R, Clinical Trials and Regulation to remain key negotiation

milestones and good indicators of the mood of the market.

• Market shifts induced by uncertainty and volatility, with subjective,

non-tariff barriers including risk perception, cultural and linguistic.

• UK likely to strike a FTA/MRA deal with the EU during negotiations.

Post-Brexit likely trend: To keep outsourcing to continental CROs.

• Great Britain likely to become both protective (immigration, border

control) and business-friendly in order to sustain international trade.

• Nobody really knows what will happen

…not even our decision makers!

THANK YOU FOR YOUR

ATTENTION!

Acknowledgements:

• Thanks to Jaume Pascual and Nuria Rovira from the

Kymos Quality Assurance team for their input.

• Thanks to Steve Bates and Michael Warren from the UK

BioIndustry Association for their feedback.